Abstract: Prior to its restructuring in the year 2003, for decades the Indian Power Sector was not allowed to function autonomously, had poor technical capabilities, huge political interference and a large workforce. Transmission and Distribution losses in some State Electricity Boards amounted to as high as 40 to 50%, resulting in massive energy shortages while electricity tariffs were low and populist. Rate of Return was never allowed to be 3% on capital thus violating Act of parliament. All these factors resulted in poor technical and financial performance of State Electricity Boards. The Reforms in electricity sector focused on organizational changes, brought competition in Generation, Transmission & Distribution Sectors and introduced Regulations. Strong and consistent energy policy is critical to cope up with the challenges and issues in Power Sector. Various policy reforms for accelerated development of Indian Power sector has shifted Indian power sector from Government owned systems towards Market based control systems, offering choices to public and private sectors. Pricing mechanism in policy has to ensure financial viability in sector and send proper signal to investors. Coal, Oil & Gas, Nuclear, Renewable and Hydro sectors need clear policy measures for the growth of and to attract private investments in these sectors. Market based system provides choice for buying power from different entities, the price is decided by interaction of demand and supply, hence pricing becomes competitive. The various policy measures taken have ensured financial viability of the sector. The Attracted investments also have ensured protection of consumer interests & promoted transparency and efficiency in operation and governance. Indian Power sector still needs to undergo a lot of institutional changes, introduce energy policies and emulate the organizations with global practices. This paper reviews various Concerns, Challenges and Prospects in Power Sector.

Keywords: Indian Power Sector, State Electricity Board, Supply and Demand, Competitive Markets.